The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Cable Bahamas’ top executive yesterday voiced optimism that it has “set the foundation” to become a dividend-paying stock once again with the unveiling of a first capital return to shareholders for five years.

Franklyn Butler, the BISX-listed communications provider’s president and chief executive, told Tribune Business that it “wouldn’t start paying a dividend if we didn’t feel we could maintain it” after declaring a collective $2.5m payout to investors on New Year’s Eve.

The six cents per share dividend, payable to ordinary shareholders on record as at December 19, 2022, will be a welcome Christmas and New Year’s present for investors who have waited patiently for a return amid a restructuring that involved the $301m sale of Summit Broadband; repayment of virtually all bank debt; and restructuring of preference share debt from short-term maturities to long-term capital not due for repayment for 10-15 years.

Speaking ahead of tonight’s annual general meeting (AGM), Mr Butler told this newspaper: “It [the dividend] speaks to the fact that we have solidified the company, the structure of the business. We are really starting to gain confidence in the improvements in our EBITDA (earnings before interest, taxation, depreciation and amortisation) coming off the Summit investment and then Aliv.

“I think it speaks to the fact we feel confident about the overall growth of the company and structure of the business for the foreseeable future. Before 2017 we’ve historically been a fairly strong dividend stock, so hopefully this will be setting the foundation for us to get there again. We have also reduced the debt on the balance sheet.”

Asked whether Cable Bahamas was now signalling it will become a consistent dividend payer once again, Mr Butler replied: “Let me put it this way. I cannot pre-empt the Board, but I can say this much: We wouldn’t start paying a dividend if we didn’t feel we could maintain it.

“We started in 2013 with Summit and ran things up to about $250m in revenue. When we eventually sold Summit we ploughed quite a lot into Alive in 2016, 2017 and 2018 to get going. We sold Summit in early 2020, and put more money into Aliv. We took those proceeds and paid off all the bank debt and really strengthened Aliv in terms of growth.”

The Cable Bahamas chief, saying that the collective dividend payout will be worth around $2.5m, added: “I think we expect to do it half-yearly, but don’t know yet. We can go back to quarterly eventually. I think the initial thinking is to get semi-annual.

“We’re delivering. If we’re paying a dividend it says that we’ve come a long way. We’re now at a point where leverage is close to three times’ target EBITDA.” Mr Butler said this had halved compared to when Aliv was in negative EBITDA territory, and leverage was six times’ the target operating income. Thanking shareholders for their patience, he added: “We believe we’re in a strong position moving forward.”

Cable Bahamas’ $2.814m net income for the 2023 first quarter, covering the three months to end-September 2022, was aided by a more than $2m, or near-50 percent, year-over-year decline in interest expenses which fell from $4.31m to $2.173m.

Revenues rose slightly, improving by 4 percent from $53.402m in the prior year to $55.579m, while operating expenses narrowed by 2.6 percent from $35.589m to $34.654m. As a result, operating income before depreciation and amortisation jumped by more than $3m, rising by 17.5 percent from $17.813m to $20.925m. That, together with the reduction in interest expense, drove Cable Bahamas’ return to first quarter profitability.

Reaffirming that Cable Bahamas’ mid-2022 refinancing, which raised $219m compared to the target $169m, has provided a solid platform for the company’s growth ambitions by replacing higher-interest preference shares with lower cost ones, Mr Butler said previously: “We’ve completed the refinancing of long-term debt for Cable Bahamas, so we don’t expect any shocks in that, as we have a ten to 15-year framework.

“We think we have a pretty decent capital structure in place that will allow us to build on what you see in the first quarter. We took on another $50m in refinancing over and above what we needed,” Mr Butler told Tribune Business of Cable Bahamas’ summer capital raise. “From a Cable shareholder perspective, we’re ready to assist Aliv with its refinancing. It has some long-term debt that has to mature at the end of the year.

“We’re working with HoldingCo and the Government to see if they want to use that [$50m] as a financing option for Aliv. Depending on where that ends up, we will use that to refinance Aliv or there’s the Series 13 preference shares on our balance sheet that we need to sort out. We have one series that we did not refinance, $26m or so.”

Cable Bahamas owns a 48.25 percent equity interest in its Aliv mobile subsidiary, but has Board and management control, with the Government holding the majority 51.75 percent. Both sides hold their ownership interests via HoldingCo, which effectively acts as Aliv’s immediate parent entity.